Staff Writer
South African retail group Lewis Group has received a credit rating upgrade from Global Credit Ratings (GCR), with its long-term national scale issuer rating raised to AA-(ZA) from A+(ZA), reflecting sustained earnings growth, strong liquidity and a resilient business model.
The Lewis Group operates 27 stores in Namibia across both urban and rural areas.
The upgrade, announced on 13 July, also saw Lewis’ short-term national scale issuer rating upgraded to A1+(ZA) from the previous rating, while the outlook was revised to Stable from Positive.
GCR said the upgrade was supported by Lewis’ ability to maintain earnings growth through economic cycles, driven by its retail operations and credit-based sales model.
“While the expanding credit book has necessitated increased debt utilisation, the robust cash generation from the credit book has supported strong liquidity and sustained conservative leverage metrics,” GCR said.
Lewis Group reported revenue growth of 11.1% to N$10.3 billion for the financial year ended 31 March 2026, supported by a 7.3% increase in merchandise sales and a 15.7% rise in financial services and ancillary services income.
The higher contribution from financial services helped increase earnings before interest, taxes, depreciation and amortisation (EBITDA) to N$1.8 billion in 2026, compared with N$1.5 billion in the previous financial year.
GCR noted that despite growth in Lewis’ debtor book, the group maintained stable credit performance, with non-performing accounts at 9.1% and paid accounts at 75.6%. The debtor cost ratio improved to 14.3% from 15% in the prior year.
The ratings agency said Lewis’ operating margin expanded to 12.6% from 12.4%, supported by improved cost conditions, including favourable exchange rate movements.
“Lewis remains well positioned to defend its market share and generate sustainable operating cash flows over the medium term,” GCR said.
The group expanded its store network to 976 outlets during the 2026 financial year, up from 918 stores in 2025. GCR highlighted Lewis’ established brands, growing bedding portfolio, customer proximity, same-day delivery capability and debit order collection system as competitive advantages.
Credit sales accounted for 69.4% of merchandise sales during the year, while financial and ancillary services contributed 47.2% of total revenue.
However, GCR noted that the rating remains constrained by Lewis’ smaller scale compared with larger retail peers and its concentration in the South African market, making the group vulnerable to changes in consumer spending and the domestic credit cycle.
Lewis’ gross debt increased to N$2.4 billion in the financial year 2026 from N$2.1 billion previously, including lease liabilities. The company raised N$1.4 billion in new longer-term debt to support expansion of its credit book.
Despite the increase in debt, leverage remained stable, with net debt to EBITDA at 1.2 times, unchanged from the previous year. Interest coverage improved to 8.4 times from 7.9 times due to lower funding costs.
GCR said liquidity remains strong, with coverage expected to remain above two times over the next 24 months.
The company has monthly debtor collections exceeding N$500 million and approximately N$1.1 billion in available committed and non-committed funding facilities.
Lewis’ capital expenditure budget is estimated at about N$160 million, while short-term debt maturities remain limited at N$41.6 million.
